Tag: tax planning

for sale sign

Selling property? Understand the tax implications first

Posted on | by Allan Hall

Know the Tax Consequences before you sell property

ATO flags income tax, CGT and GST issues for business property transactions

If your business or entity is planning to sell property, it’s important to understand how the transaction will be treated for tax purposes. The Australian Taxation Office (ATO) has issued a timely reminder that the way property sales are taxed depends on the purpose of ownership and how the property has been used.

Business Property Sales May Be Taxable

If you’re in the business of buying and selling property or even developing property for resale, you may be assessed on revenue account, not capital account. This means the entire profit from the sale could be considered ordinary income, and not eligible for capital gains tax (CGT) discounts.

The key considerations are:

  • Was the property acquired with the intention to resell for profit?
  • Was the property used in a business of property development or subdivision?
  • Have you previously engaged in similar transactions?

In these cases, tax applies to 100% of the gain and CGT concessions may not be available.

Capital Gains Tax May Apply in Other Situations

If the property was held as a long-term investment and not part of your trading stock, CGT may apply instead. This could allow for CGT discounts if the asset was held for more than 12 months.

Factors affecting CGT include:

  • The nature of the entity (individual / trust / company)
  • The holding period of the asset
  • Whether it qualifies for any small business concessions.

GST Could Be Involved Too

If you are registered for GST and the property transaction is part of your enterprise, you may need to account for GST on the sale. However, if the sale qualifies as the “sale of a going concern” or involves farmland, GST concessions may apply.

Property transactions can trigger complex tax implications depending on your business structure, purpose and transaction history. Incorrect treatment can result in significant tax liabilities and penalties.

Need clarity on your property tax position?

Talk with your accountant or business advisor before you list or sell. We’re here to help you navigate the tax implications and make informed decisions.

CONTACT ALLAN BUSINESS BUSINESS ADVISORS

, , , , , ,
managing debt

Upcoming Tax Deductibility Change: Time to Refinance ATO Debt?

Posted on | by Allan Hall

From 1 July 2025, interest on ATO debt will no longer be tax deductible. 

This change could significantly impact business cash flow and overall tax strategy.

As a result, it’s more important than ever to consider alternative financing options that could reduce your interest costs and in some cases, restore the tax deductibility of the debt.

If you own property with available equity, there may be an opportunity to refinance your ATO debt into a home loan. The benefits include:

  • Lower interest rates – potentially reducing from ~11% (ATO) to ~7%
  • Potential tax deductibility – depending on structure (confirm with your accountant as debt related to personal tax debt is not tax deductible)
  • Improved cash flow – longer loan terms up to 30 years

Lenders also offer flexible loan options in regards to documentation required. This can range from full doc loans (full tax returns and financials) to Alt doc loans (BAS, bank statements, accountant/client declarations)

Allan Hall Business Advisors and Allan Hall Finance can work together to help you prepare for this change and explore better funding structures.

Speak with us today to review your options ahead of the 1 July 2025 deadline.

CONTACT ALLAN HALL BUSINESS ADVISORS BROOKVALE SYDNEY

Related reading

General and Shortfall Interest Charges no longer deductible from July
, , , , , , , , ,
managing debt

General and Shortfall Interest Charges no longer deductible from July

Posted on | by Allan Hall

Changes to GIC and SIC deductions passed through Parliament

IMPORTANT Parliament has passed legislation to deny tax deductions for General Interest Charges (GIC) and Shortfall Interest Charges (SIC) incurred on or after 1 July 2025.

What this means if you have existing debt

  • ATO interest on overdue tax will no longer be deductible, making it a real cost rather than a tax-offset
  • If you currently have tax debt, the cost of keeping that debt will increase
  • Businesses using ATO payment plans may find them significantly more expensive from a tax perspective
  • Refinancing tax debt through a lender (where interest is still deductible) may present a smarter and more cost-effective option.

We recommend reviewing your tax position before 30 June to understand the potential impact and consider your options.

If you’d like help assessing if alternative financing could benefit your business, please contact your Allan Hall Advisor.

CONTACT ALLAN HALL BUSINESS ADVISORS

, , , , , ,
gavel

$20k Instant Asset Write-Off now law

Posted on | by Allan Hall

The $20,000 instant asset write-off has officially passed into legislation and is now available for eligible assets purchased and installed before 30 June 2025.

This provides some certainty for planning this financial year, however we’re still unsure what will happen beyond 30 June 2025, with no further extensions announced at this stage.

What this means for small business:

  • Available to small businesses with an aggregated turnover under $10 million
  • Applies to eligible depreciating assets costing less than $20,000 (excluding GST)
  • The asset must be first used or installed ready for use by 30 June 2025
  • The $20,000 threshold applies per asset, so multiple assets can be claimed.

If you’re thinking of upgrading or purchasing business equipment, vehicles or tools, now is a good time to take advantage of this incentive. Please contact us if you’d like help assessing whether your planned purchases qualify.

Need help?

To discuss how this measure impacts your business, please contact your Allan Hall Advisor.

CONTACT ALLAN HALL BUSINESS ADVISORS

, , , , , ,
a group of people sitting around a table with a laptop and a computer

ATO issues ‘good governance’ checklist for NFPs

Posted on | by Allan Hall

The Tax Office has reminded not-for-profit organisations to check that tax and super obligations are being met effectively to uphold good governance.

Background

It’s important that your NFP organisation has good governance and you are meeting your tax and super obligations. You need to check that you continue to be entitled to:

  • deductible gift recipient (DGR) endorsement
  • income tax exemption
  • other tax concessions.

To do this, you should complete a self-review of your NFP every 12 months and when your organisation makes changes to its governing rules or structure and activities.

The checklist and worksheets below will help you complete your self-review. You may need to complete more than one worksheet depending on the entitlements you are claiming.

You must also:

If you don’t notify the ATO of changes to your eligibility or registration details, penalties or a referral to prosecution may apply.

Not-for-profit good governance checklist

All NFPs should complete the self-governance checklist. This will help you:

Eligibility to income tax exemption

From 1 July 2023, non-charitable NFPs with an active ABN need to lodge an annual self-review return to confirm their eligibility to self-assess as income tax exempt.

NFPs that self-assess as income tax exempt, can use the questions in the ATO’s self-review guide to conduct an early review. This can be done before the NFP-self-review return is available on 1 July.

Charitable NFPs endorsed as a tax concession charity (TCC), must self-review TCC endorsement annually, and whenever there is a change in the charity’s structure, purposes or operations.

Charities are not required to lodge the NFP self-review return with the Tax office.

The following worksheet will help charities review their TCC endorsement:

Deductible gift recipient (DGR) endorsement worksheets

The following worksheets will help you to work out whether your NFP organisation is still entitled to endorsement as a DGR.

Select the worksheet that applies to your organisation:

CONTACT ALLAN HALL BUSINESS ADVISORS

, , , , , , , ,
a person holding a steering wheel

Car Limit for Depreciation

Posted on | by Allan Hall

Assets and Exclusions 

For the 2023–24 income year, the Australian Tax Office (ATO) has set the maximum value for calculating depreciation on the business use of a car at $68,108.  

This cap applies to passenger vehicles (excluding motorcycles or similar vehicles) designed to carry less than one tonne and fewer than nine passengers. 

When calculating depreciation, the car limit is used as the maximum allowable claim, regardless of the price paid for any trade-in during the year the car was first used or leased. 

Car Limit Values by Income Year 

The table below summarises the car limits and the indexation factors for recent income years: 

Financial year Car limit ATO reference 
2024-25 $69,674 The indexation factor is 1.023, calculated as 445.7 divided by 435.5. 
2023–24 $68,108 The indexation factor is 1.052, calculated as 435.5 divided by 413.8. 
2022–23 $64,741 The indexation factor is 1.066, calculated as 413.8 divided by 388.1. 
2021–22 $60,733 The indexation factor is 1.027, calculated as 388.1 divided by 377.9. 
2020–21 $59,136 The indexation factor is 1.027, calculated as 377.9 divided by 368.1. 

For detailed examples of how to apply the car limit, visit the ATO website. 

How the Yearly Car Limit is Calculated 

The car limit is adjusted annually in line with the changes in the motor vehicle purchase sub-group of the Consumer Price Index (CPI).  

Indexation Process 

  • The indexation factor is determined by dividing the sum of the index numbers for the quarters in the year ending 31 March by those for the quarters in the previous year ending 31 March 
  • The car limit for the income year is then calculated by multiplying the previous year’s limit by the indexation factor unless the factor is one or below, in which case the previous car limit remains unchanged.  

For the most accurate and updated details, refer to the ATO’s official guidelines. 

Consulting your Allan Hall Tax Advisor can help you run tailored calculations and find the most tax-efficient approach for your circumstances.  Reach out today for a personalised assessment of your tax strategy. 

CONTACT ALLAN HALL BUSINESS ADVISORS  

, , , ,
car buying private or business

Changes to car thresholds from 1 July

Posted on | by Allan Hall

The following car threshold amounts will apply for the 2024–25 financial year.

Income tax

  • The car limit for 2024–25 is $69,674. This is the highest value you can use to calculate depreciation on a car where both of the following apply:
    • you use the car for business purposes
    • you first use or lease the car in the 2024–25 income year.
  • As a business owner, you can claim a tax deduction for expenses for motor vehicles you use for business purposes.
  • If you use a motor vehicle for both business and private purposes, you can only claim a deduction for the business part. You must be able to show the percentage you claim as business use and have records to support your claim.

Goods and services tax (GST)

  • If you buy a car and the price is more than the car limit, the maximum GST credit you can claim (except in certain circumstances) is one-eleventh of the car limit. For the 2024–25 income year, the maximum GST credit you can claim is $6,334 (that is, 1/11 × $69,674).
  • You can’t claim a GST credit for any luxury car tax you pay when you buy a luxury car, even if you use it for business purposes.

Luxury car tax (LCT)

  • The LCT threshold for 2024–25 is:
    • $91,387 for fuel-efficient vehicles. This is in line with an increase to the motor-vehicle purchase sub-group of the Consumer Price Index (CPI)
    • $80,567 for all other luxury vehicles, in line with an increase in the ‘All Groups’ CPI.

If you’re looking to buy a luxury car, remember to be cautious of those who offer to buy one from a dealer on your behalf at a discount. This may be a scheme to evade LCT. You may be at risk if they don’t have the right insurance or if the car is damaged or defective.

To find out more about LCT, including when you need to apply it and what’s included in the LCT value of a car, visit the Luxury car tax page on the ATO’s website.

CONTACT ALLAN HALL BUSINESS ADVISORS

, , , , , , , ,
Parliament House

Tax cuts Bill passes through Senate

Posted on | by Allan Hall

Revised tax cuts pass both houses

A broader range of taxpayers are set to receive tax cuts from 1 July, with Labor’s tax cuts bill passing through the Senate.

The bill to implement Labor’s revised tax cuts has now passed both houses of parliament.

Prime Minister Anthony Albanese announced in late January that Labor would make amendments to the stage three tax cuts to deliver broader and better outcomes to all taxpayers.

The revised measures involved cutting the lowest rate of income tax from 19 per cent to 16 per cent and the second lowest from 32.5 per cent to 30 per cent, increasing the Medicare levy threshold and the top 45 per cent tax threshold.

Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024 passed through the Senate without amendment.

The Senate also passed the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill 2024, which increases the Medicare levy and Medicare levy surcharge low-income threshold amounts for individuals, families and individual taxpayers and families eligible for the seniors and pensioners tax offset.

Read more detail about this topic

CONTACT ALLAN HALL BUSINESS ADVISORS

, , ,
July

Super contribution caps increase from July

Posted on | by Allan Hall

Contribution caps to increase from 1 July 2024

Following the release of the latest Average Weekly Ordinary Time Earnings (AWOTE) index, the expected increase to the contribution caps from 1 July 2024 has been confirmed.

As a result, from 1 July 2024:

  • The standard Concessional contribution cap will increase from $27,500 to $30,0001.
  • The Non-concessional contribution cap, which is expressed as 4 times the standard concessional contribution cap, will increase from $110,000 to $120,0002.
  • The maximum Non-concessional cap available, under the Non-concessional contribution bring-forward provisions, will increase from $330,000 to $360,0003.
  • The Total Superannuation Balance Thresholds, used to determine the maximum amount of bring-forward Non-concessional contributions available to an individual, will also be adjusted.

The Non-concessional contribution caps and thresholds are summarised in the table below:

TSB at 30 June 2024Maximum available NCC CapMaximum available NCC Period
< $1.66 Million$360,0003 Years
$1.66 – < $1.78 Million$240,0002 Years
$1.78 – < $1.9 Million$120,0001 Year
$1.9 Million (and above)$0N/A
Non-concessional contribution caps and thresholds

In addition to the adjusted contribution caps and thresholds outlined above, several other thresholds will also be impacted including:

  • the eligibility thresholds for the Superannuation Government Co-Contribution
  • the CGT Contribution cap (which applies following the sale of eligible small business assets)
  • the Low-Rate Cap (which applies to the tax treatment of superannuation withdrawals)
  • Redundancy tax-free thresholds, and
  • The Superannuation Guarantee maximum contribution base.

The General Transfer Balance Cap, which is indexed according to movements in the Consumer Price Index (CPI), had already been confirmed as remaining set to $1.9 Million for the 2024-25 financial year.

CONTACT ALLAN HALL SUPERANNUATION

, , , ,